ABMU Ebook 28042014

Mutual Funds
Cutting a
short
Presented by
Table of Contents
1
A long overdue gathering
Career blues & financial woes
In the spirit of mutual interests
Tea, biscuits, & some risky business
Creativity lingers in those nimble fingers
All that glitters is not Gold
When nothings left, go right
Decoding the warning signs
Fat Lees & timing details, please!
10
Ashwins groans & Sids goals
11
The aftermath of Ashwins chips & the thing about SIPs
12
Are you loansome tonight?
13
Teary eyes, sad goodbyes, & an unexpected surprise
Pearls of Wisdom
A. Balasubramanian,
CEO, Birla Sun Life Asset Management Company
In a career spanning over two decades in Indian mutual funds, A. Balasubramanian, CEO, Birla
Sun Life Asset Management Company provides a rst-person insiders account of the industrys
two decade old journey in India
With 2014, the Indian mutual fund industry enters the third decade of its running. 2014 also
marks the 22nd year of the SEBI Act, 1992 which saw the beginning of Mutual Fund regulations in
India.
Prior to this period, mutual funds were largely dominated by public-sector sponsored mutual
funds which oered close-ended products with implicit guaranteed schemes. As the industry
faced challenges in bridging the gap between the nal outcome on the portfolio return and
assured return, it moved towards the NAV system which is linked to the market movement.
Mutual fund vehicles therefore became pure pass through wherein the risk was fully passed
onto the investor.
Since then, the mutual fund industry has evolved with a healthy progression with more and more
players joining in from both private, and foreign sponsored mutual funds. The entry of foreign
mutual funds was mostly through joint venture partners in India.
This development brought about innovations by way of rich diversity of products across the risk
spectrum. These varied from liquid/ money-market funds, to income funds, to products panning
across dierent maturity buckets. The very fact that the industrys assets under management in
this category today represents close to 75% of its overall size reects the success of the industry.
Similarly, equity schemes too came to be categorized into large-cap, mid-cap and small-cap, with
further division into consumption, and infrastructure-based themes. While such funds i.e.
thematics delivered mixed returns, diversied equity funds in both large-cap and mid-cap have
done quite well in the last 20-year period.
Mutual Funds in India have played a signicant role in the development of the capital markets in
both, debt and equity. While one may argue that retail investor participation in India is too low in
direct equity and debt, mutual funds still remain the largest representative of the Retail Investor
in India. While doing so, the Industry has evolved remarkably in terms of transparency.
This is where the regulation comes into play. Mutual fund regulations have evolved most
dynamically over the years with the single-most objective of empowering Mutual Fund investors
in the form of higher disclosures.
From past to future forward

Today, mutual funds is the only industry where the portfolio disclosure is 100 percent. Regulation
ensured that even fund expenses are capped and disclosed. However, like the two sides to a coin,
high-level of information disclosure to investors often subjects the industry to public scrutiny
both with a positive and negative connotation.
In the journey of the last 20 years, the Indian mutual fund Industry has most outstandingly
weathered all storms that have hit the Indian Economy and the Financial Sector or the capital
markets in particular. It has been experienced that the aftermath of every turbulence aecting
both, the Indian and Global Economy, has seen mutual funds in India emerge as even stronger a
platform protecting the hard earned money of investors.
The industrys growth rate witnessed an exponential high between the years 2004 - 2008. This
could be largely attributed to a wave of New Fund Oerings by mutual fund companies which
helped the industry expand to a new set of Investors. However, the US subprime crisis and
collapse of few large Institutions in the US in 2009, had the Indian Regulator become even further
protective of Indian Investors. This was around when SEBI abolished entry load, an age old system
in the Mutual Fund industry both in India and overseas.
While the Industry found this unique, it however remained one of the most under-penetrated
industries compared to say, the mutual fund industry in the US. It however adapted to this
change in the business model very quickly. The distribution community who were primarily doing
the job of advising investors too did not have much choice but to adapt to the new model.
This was when the concept of advisory fees for nancial advisors was born. As consumers pay
fees to a Doctor or to a Legal Advisor for counsel, there was a sense of realization that the service
provided by nancial advisors should also be acknowledged with an advisory fee. After all,
nancial advisors manage the hard earned money of investors counseling them how it can be
most eciently allocated to meet the investors nancial goals.
One has to accept that any change reasonably dierent from what the industry has been
accustomed to, would take some time to settle down and receive acceptance as the new normal.
While it took some time for the new regime to percolate, the industry too along with the help of
SEBI and AMFI mobilized to examine various avenues of growth.
In the last two years, the industry on its own, brought in more discipline to protect the interest of
Investors. One such measure was the introduction of daily valuation of xed income securities
across mutual fund debt schemes. This step not only brought in high level of uniformity across all
mutual fund players, but it was also a move unique to India, as we are the only ones to follow this
in the world. This lead taken by the mutual fund industry, set the trend for others in the Banking
and Financial Services sector such as Banks and insurance companies to follow mutual fund
practices on the debt securities valuation. SEBI too set up a Mutual Fund Advisory Council to look
at various options through which the industry can grow.
From past to future forward

One such move was in segmenting the nation into two distinct categories - Top15 and B15 cities,
another in recommending 2 bps towards the creation of investor awareness and education for
mutual funds. In all probability a game changer, this enabled increased focus beyond Top 15
cities to expand the retail base while providing mutual fund players the beginning of a method to
approach pockets of retail investors across India in an organized manner.
The retail penetration in India has been phenomenal for the telecom industry. Despite its longer
vintage compared to the telecom sector, the Indian Mutual Fund industry remains with less than
2 crore investors. While it is in a nascent stage when we compare the potential versus current
investor base, mutual funds is one of the most matured industry for investors to put their hard
earned money. While doing so, it is equally important to have the discipline of investing in various
assets classes of mutual fund with a clear goal in mind rather than using mutual funds as one of
the means of speculating.
Indian mutual funds oer investors the highest level of transparency which should not in turn, be
used by investors to reject their investment. At a time when Unregulated Entities such as
unscrupulous promoters, Ponzi schemes or Plantation companies among others, lure even the
savviest of investors with the promise of unbelievable returns, the safety of the transparency
provided by mutual funds comes attested by an extremely vigilant regulator. Investors must at all
times be extremely wary of any investments in unregulated entities.
Mutual Funds are clearly the best proven vehicle to provide investors meet their nancial goal.
Given the industrys steadfastness and perseverance of the past two decades, we believe that the
way ahead will be substantially better. Recently, there have been discussions on how the mutual
fund industry can provide solutions to all types of age investors to meet their Retirement Goals.
This is one of the successful models that contributed to the growth of mutual funds in the US. If
this receives clearance in India as well, we may probably witness one of the fastest pace of
growth in the coming decade.
To conclude, I would like to leave you with some thoughts from Warren Buett. Warren said,
Every tomorrow has been uncertain. Someones sitting in the shade today because someone
planted a tree a long time ago. Just because an idea has not panned out yet doesnt mean that its
dead in the water. Plant those seeds.
And remember, You can only live life forward," Wishing you a very happy and prosperous 2014!
It was a rainy Friday afternoon when Vivaan, Kabir, Sid, and Ashwin arrived together under two
roomy umbrellas (two huddled under each), and rang the old-fashioned doorbell of Mr. Sens
house. All four were the classic case of childhood friends those that went to kindergarten
together, then to junior school, high school, and even college, having seen each other at their best
and worst alike. Living and growing up together in the same neighbourhood, they were as good
as family; all their free time was spent in each others company, and at each others houses (for
breakfast, lunch, dinner, and the very frequent sleepover as well). Thick as thieves, they were, and
extremely protective and (and though theyd hate to admit it) possessive about each her. In other
words, the four lads were inseparable, and considered themselves brothers in arms.
However, as the years rolled by, and as they graduated from college, each went his separate way
Kabir and Sid stuck around and got themselves blue-collar jobs in their locality, while Vivaan
and Ashwin proceeded to earn professional degrees, moving out of the country and working
plush white-collar jobs at large MNCs. And even though they vowed to the other to keep in touch
throughout, no matter where they went, what they achieved, and what they did, time wasnt that
kind to them. Their communication over the years became more and more sporadic, ceasing
altogether of late. Of late, up until that phone call, that is. It was that unexpected, yet welcome
call from this obviously important Mr. Sen that got them to regroup once again, after almost 12
years of separation.
Now about Mr. Sen, the mysterious force that seemed to get all four Vivaan, Kabir, Sid, and
Ashwin to reunite. Mr. Sen was no wizard or genie. He was in fact their neighbourhood tutor,
and their most beloved one at that. Sounds pretty banal and basic, right? However, he was no
ordinary tutor. Hed been with them, teaching and guiding them right from their junior school
days. He knew them inside out, and had always been there for them even outside of
study-related matters. He was their go-to guy for studies, knowledge, advice, retreat, guidance,
life lessons, and even just for idle chatter when they needed a listening ear.
Mr. Sen, though evidently greying and old now, had aged gracefully over the years, and still
possessed a wealth of knowledge. His phone call to them wasnt a cry for help, nor was it
motivated by any selsh purpose; but instead just a wanting to relive the good old days call it an
old mans response to a bout of nostalgia. Hed called them each individually (having acquired
their contact numbers from family members, who were equally fond of him), and invited them to
a lunch. And being the father gure that he was to them, they all dropped their work without so

much as batting an eyelid, and gathered together to go back home to greet him; Vivaan and
Ashwin having caught the rst ight out of where their respective jobs that taken them.
On opening the door, Mr. Sen was pounced upon by his four students, all ecstatic at seeing him
after all those long years apart. Mr. Sen, you look like you havent aged a day, said Ashwin,
grinning from ear to ear. Oh, Ashwin, you neednt butter Mr. Sen up now youve not got marks
at stake, you old nerd, replied Sid in jest. Never mind those two and their nonsense, said Kabir,
as he swung his arm around Mr. Sens shoulder, and walked him into his home. Its good to see
you lads, too! And about that whole ageing business there well, I dont know about me, but you
boys have denitely aged, came Mr. Sens witty, sarcastic retort, as Ashwin and Sid blushed.
Mr. Sen led them into his living room, where he had laid out drinks and refreshments pre-lunch.
As they ate and drank, conversation picked up, just like the old days. So, Mr. Sen, how have you
been? Its been years, and your place seems exactly as we left it all those years back books
strewn all over the place, and what not, enquired Vivaan, once the hugs and pleasantries were
dealt with. Well, my dear boy, you all may have moved on to bigger and better things, but for me,
living in this humble town, not much has changed least of all, my home, replied Mr. Sen. He
continued, I quit tutoring a couple of years back, because both my age and health wouldnt
permit it, and have taken to reading even more voraciously since. Ah, Mr. Sen, still at his books
eh! I wish we were half the bookworm you are when in school, said Vivaan. Well, Ill be damned
that library of yours seems to have swollen to over twice its size, Mr. Sen! came Ashwins
stunned reply, as he glanced over at Mr. Sens library niche in the wall, where books seemed to be
jostling with the ones beside, over, and in front of them, for want of an iota of space.
Yes, you could say Ive become older and wiser, Ashwin, laughed Mr. Sen, and the others
laughed with him. They were all amazed at how Mr. Sen had managed to retain his jolly,
humorous self through the passage of the years. Lets make our way to the table for some lunch,
shall we? And while were at it, we can catch up some more. I really called you all over because its
been forever, and I wanted to know what my four favourite musketeers have been up to aside
from completely forgetting about my existence, of course, winked Mr. Sen, as he tottered into
the kitchen to go get grub ready. The boys, all evidently shamefaced, had no appropriate response
to that. They looked at each other ashamedly, and their eyes sadly followed Mr. Sen as he ambled
into the kitchen to get things ready. In that one sentence of his, they realised how lonely Mr. Sen
had been, and to think that it was something in which they had a part to play, left them feeling

devastated. While Kabir and Sid accompanied Mr. Sen to the kitchen to help him get things ready,
Vivaan and Ashwin stayed back and took a stroll around that familiar house.
Looking at the photos, the furniture, the antiquities, the upholstery, and all the other little
oddities that they remembered being around as children, Vivaan and Ashwin felt a surge of
nostalgia and both shed a silent tear thinking of days gone by. As their wandering eyes strayed
around, they pictured themselves as children, studying at that table, watching that television set,
eating at that table on those very plates with those very spoons and forks, lying on that very
couch, and hiding behind that very cabinet when playing hide and seek. Sudden realisation
dawned on the two that while the world had changed for them, that it had been just the very
same for Mr. Sen. That pang of remorse was interrupted when Kabir and Sid walked out of the
kitchen with Mr. Sen at their heels, carrying the pots and pans of sumptuous food, the aromas of
which suused the room with a feel-good factor. Now, now quit being so formal, and have a seat
this instant, commanded Mr. Sen, and the boys arranged themselves around the table in the
same fashion they had as when they were young and restless. Mr. Sen, too, took up his usual
position, on his steadfast wooden, lightly cushioned grandfather chair that had weathered much
in the same fashion as he. Before digging in, the four friends all looked at one another, and
Vivaan, echoing the sentiment of his three compatriots said, Mr. Sen, were terribly sorry for not
having kept in touch. We feel downright awful about it, and cannot apologise enough. The thing
is, weve all been so caught up in our respective lives and I dont mean for that to be any kind of
justication or excuse whatsoever that we havent really given thought to much else least of
all those we left behind. You, most importantly. Mr. Sen, clearly moved by this, took Vivaans
hand, and replied, I bear no ill will towards any of you boys. I have always thought of all of you as
my own, and know that each of you has always been in my thoughts. I was young too, once, so I
know how things can get; I know things change, and I know certain aspects of life get left behind,
unintentional though it may be. Now, dont be so disheartened; Im still here, as are all of you, and
we must now make up for the precious time weve lost out on. And the best way to do that is with
food in our bellies, so please, go ahead and help yourselves.
Career blues &

financial woes
And so, the party of ve ate, drank, and made merry well into late afternoon. They chatted till
they were practically all out of breath, and moved lazily to the living room, plonking themselves
on the cozy sofas and couches surrounding the replace. As they lazed around, Mr. Sen went back
into the kitchen, tinkered around a little, and came back out with a pot of steaming tea, followed
by a tray of jam biscuits. As the boys sat lounging, reliving their old days at Mr. Sens, and
reminiscing about how theyd always try to shun their homework and all other mischievous
antics, Mr. Sen enquired how they were all doing presently.
In truth, none of them wanted to discuss work, and it was only when Mr. Sen asked that all
suddenly became aware of an uncomfortable undercurrent something of a white elephant in
the room. In reality, Vivaan and Ashwin had done far better for themselves than Kabir and Sid, but
there was still something unsettling in each of their lives; and none of them were in a mood to
admit it. Mr. Sen had been around them long enough to know that something was troubling each
of them, even though they tried their hardest to not show it outwardly, and burden him.
So, how are you boys doing at work, then? Ive heard about your pregnant wife, Sid; and about
your engagement, Vivaan, said Mr. Sen, as he smiled in their direction. Yes, Mr. Sen, Im happily
engaged, and soon to be married, and youd better make it for the wedding, which will be
happening in town, replied Vivaan. Oh yes, Mr. Sen, Aartis all of 5 months pregnant and were
stoked about our little bundle of joy, came Sids response.
But for a man as wise and learned as Mr. Sen, it wasnt dicult to pick up on the hesitant
responses that were fraught with much-subdued anxiety. Suce to say, Mr. Sen was no old fool.
How about we dispense with these formalities and you boys just tell me whats really going on,
Mr. Sen replied, as the rest smiled rather coyly.
So come on, then. Lets hear it. Sid, you go rst. Tell me whats on your mind son dont be so
tight; its me. Go on, talk to me about whats bothering you. With much reluctance, Sid managed
to stutter out the following, Well, Mr. Sen, as excited as I am about Aartis pregnancy, I am
equally worried about our future. You see, even though I have a respectable, well-paying job, Im
not particularly nancially what they call well-to-do.
The others were about to interject and dismiss the issue, thinking it too grave and out-of-scene,
when Mr. Sen stayed them with the raising of his hand. Continue, Sid, he said, and Sid continued.
The thing is, I was to be due for a promotion in the next couple of months, and both Aarti and I

were thrilled at the prospect of me getting a healthy raise, if not for anything but the sake of our
child. But, just 4 days ago, we were informed about the companys decision to stall promotions
for some time. As if that wasnt enough, theres the added woe of rising prices of close to
everything today. And this promotion was the only way I could have multiplied my savings, which
is currently lying like a sitting duck in my humble savings account, and provided for my wife and
child a better life. You must understand that I havent told Aarti about this as yet, because I dont
want her worrying any more than she already is. But, we dont have anyone who can guide us
nancially, and the weight of the future is just bogging me down. Oh, its just a whole lot to
ooad onto you, and Im terribly sorry for this tirade, Mr. Sen. I didnt mean to... and he trailed
o, lost in thought.
Mr. Sen walked up to Sid, and took up a seat beside him. Laying his hand on his shoulder, he said,
Sid, youre stronger than that. I thank you for opening up, and Im always here to oer you advice
and guide you, as I always have been, come what may. Know that this promotion is not going to
make or break you. Upsets are a natural part of life, and youve got to nd another solution to
your problems theres never just only one. All you have to do is look hard enough, or just ask.
Not to interrupt, Mr. Sen, but the thing is, is that this promotion could have done wonders for my
rather sedate, insipid nancial life. Not to say matters are so bad that I nd it dicult to get by
on a daily basis, but you know, continued Sid, I just lack that feeling of condence when it
comes to my nances. I want to feel nancially condent, so that it resonates, and gives Aarti a
positive vibe she deserves it. I see some of my colleagues at work, and they walk around with
their head held high, discussing the latest stock market trends and what not. I just overhear
these conversations and feel instantly dejected for my thorough lack of knowledge in these
nancial elds. And so, given that Im quite bereft of knowledge in those spheres, I thought this
promotion and a good hike in salary would be just the thing I needed.
You see, my boy, a promotion isnt your only gateway to multiplying your money. Its all about
perspective. I fully comprehend the essence of what youre saying, and I want you to know that
being nancially condent is a state of mind that if you will it and work towards it in full earnest,
it is possible. Im going to oer you a feasible solution to this problem, provided youve got the
time, patience, and willingness to hear me out. This solution could lead you on to the road of
ultimate nancial freedom corny as it sounds. So, keep an open mind for me while at it, will
you? questioned Mr. Sen.
Oh, most certainly, came Sids slightly upbeat reply. All the others sat rapt with attention as Mr.

Sen proceeded to dominate the conversation, sharing his trove of knowledge with not just Sid,
but with the rest of them in some way as well. Tell me Sid, what do you know about investing? I
assume you have invested? enquired Mr. Sen. Well, just in Gold, really. I have a few fragmented
investments elsewhere, too, but Im no pro to be honest. Besides, I handle it all myself, and take
my decisions based on what pals at work tell me and what I read in the papers, replied Sid,
earnestly. Have you heard of any other investment avenues aside from gold, probed Mr. Sen, as
he observed Sid at the crossroads of this dilemma of his. Barring Gold, Ive heard of Real Estate,
Bonds, and Equities as lucrative investment avenues, Mr. Sen. I havent heard of everyday Joes
like me, at my age, investing in these seemingly high-end investment avenues, you know?
replied Sid, a tad embarrassed.
Hmm. So you havent explored the Mutual Funds hemisphere then, have you? asked Mr. Sen,
with a smirk on his face. Well, I have, but Ive always thought it too advanced a concept for me,
and hence shrugged it aside. Why? Do they work? asked Sid, perplexed. Do they work?
chuckled Mr. Sen, why, mutual funds are just the solution to your problem here, Sid, came Mr.
Sens rapid re, excited response. While you may think that labelling gold, equities, and real
estate elitist might sound asinine on your part, youre actually pretty accurate about that. The
thing with those investments is that they require you to contribute massive sums of your
hard-earned, even harder-saved precious money, and this money tends to be locked up for a long
time. So, you just have to play the waiting game, and hope that in the end at some future point
you will reap the benets. With mutual funds, its quite dierent. You can start small as small
as Rs. 500 or Rs. 1,000. So, yes, mutual funds are denitely the way to go for you, Sid.
Sid, relived at not having been ogged for his elitist comment, lent a keen listening ear to Mr.
Sen, but somewhere within, still felt a great deal of uncertainty about the whole thing. Scepticism
abounded as he mused to himself, Starting with as little as Rs. 500 or Rs. 1000? Too good to be
true, perhaps? Mr. Sen, observing him in this pensive state, made up his mind then to hash this
entire mutual funds matter out with Sid, so he could eventually shed his cape of nancial fear,
don his hat of nancial condence, and strut down the path of life feeling nancially liberated.
Takeaways
Being nancially condent and independent is a state of mind
Investment avenues like gold, xed deposits, and real estate require a large amount of money
With mutual funds, you can start with as small as Rs. 500 or Rs. 1,000.
In the spirit of
mutual interests
You know, Sid, youre not the only one thats sceptical about mutual funds. Ive had quite a
handful of my ex-students probe me about the wonders of mutual funds, and if it is in fact a
worthwhile investment avenue. A lot of them are nancially hesitant, just like you. And I tell them
the same thing Im telling you, said Mr. Sen. Im sure this may come across as rather horrible of
me, Mr. Sen, but Im sure glad Im not the only one out there thats this nancially inept, if you
could call it that. If you have the time, Mr. Sen, could you tell me all about mutual funds, right from
scratch? Well, I suppose I could put aside my Socrates for today. Ive been high on philosophy
this last month. I guess Im at that stage in my life where philosophy appeals to me, oldie that I
am. But you owe me a book or two in return for this sacrice, came Mr. Sens quick-witted
response, evoking a hearty laugh from all four lads.
So Sid, let me explain to you, rst and foremost, what mutual funds are. To put it simply, mutual
funds are collective investment vehicles, wherein multiple investors like you come together and
collectively pool their money into a mutual fund scheme, with a mandate to invest, usually by an
expert also commonly referred to as a Fund Manager for a pre-determined fee. Mr. Sen
paused, and continued, If any of this ies above your head at any point, Sid, do let me know, so I
can break it down for you, and explain it to you as best I can. Sid nodded politely, and Mr. Sen
continued, Yes, so, as I was saying, this money is invested as per the particular scheme mandate,
by professional fund managers, into various underlying assets, which determine the performance
of the scheme, i.e. a gain or a loss. This performance net of fees then goes back to the investors,
like you. Sid, thoroughly intrigued by how simple the concept was, interjected, Wow, Mr. Sen,
the way you put it, a mutual fund actually seems like a very straightforward, no-frills investment
avenue. All this while Ive been thinking it was some highly risky, complicated nancial avenue,
and you know the inverse relationship that exists between me and numbers.
Dont we all! blurted out Kabir, Ashwin, and Vivaan collectively, all with massive grins plastered
across their faces. Yeah, yeah, this was expected, guys. I regretted it the moment I said it, said
Sid in response, smiling himself. Ignore those lads, Sid, said Mr. Sen, noticeably grinning
himself.
After the lads had composed themselves, Sid got back to the matter at hand, and enquired, So
whats the deal with these fund managers, Mr. Sen? I mean, why cant I invest myself? After
musing a while, Mr. Sen responded, Tell me Sid, why did you pay fees and go to school to learn?
You could well have bought the required study material, and learnt it at home yourself. Why pay
a tutor or a teacher? You go to school because of that special quality that teachers bring to the

table because theyve got the expertise and skill to really make you understand things better.
The same logic applies here fund managers are professionals with a prociency in the eld. A
novice like you may be able to understand the broader picture as it concerns mutual funds, but
the nuances will evade you; for the simple reason that you arent an expert in the eld. So, like
you pay a fee to the school to avail of the services of qualied teachers, you pay a fee to
professional fund managers to manage your mutual fund money as best they can. Well, thats
an excellent analogy, Mr. Sen, I must say, said Sid, nonetheless, attractive as a mutual fund
seems with these expert, qualied, and highly experienced fund managers, what schemes are
these that you talk of? I realise my money is being invested into these supposedly protable
schemes, but could you also may be shed a little light on these schemes that shelter investors
money? A very keen observation, and a good question, Sid, Mr. Sen responded, there are
actually dierent types of mutual fund schemes available to invest in underlying asset classes.
Let me talk of them individually, and listen carefully now: The rst are Equity-Oriented Schemes,
wherein a majority of your money is invested in equities; the second are Debt-Oriented Schemes,
wherein a majority of your money is invested in debt; the third are Money Market Schemes,
wherein a majority of your money is invested in debt, but with a maturity period of under a year;
the fourth are Hybrid Schemes, wherein, as the name suggests, your money is invested in a
combination of equity and debt; the fth are Gold Exchange Traded Funds (ETFs), wherein a
majority of your money is invested in gold; the sixth are ELSS Schemes, which are nothing but
equity schemes with a 3-year lock in period and tax benets; and lastly, theres Real Estate ETFs,
active and successful in countries like the US, but yet to arrive in India.
I see, replied Sid, slowly acclimatizing himself to this magical world of mutual funds. While Sid
was taking it all in and making sense of it, Ashwin poured him another cup of tea, and handing it
to him said, Relax, Sid, you look like the weight of the world is on your shoulders. Breathe, have
some tea, and take it easy.
Takeaways
Mutual funds are collective investment vehicles, wherein multiple investors like you come
together and collectively pool their money into a mutual fund scheme, with a mandate to
invest, usually by an expert
There are dierent types of mutual fund schemes available to invest in:
Equity-Oriented Schemes
Debt-Oriented Schemes

Money Market Schemes
Hybrid Schemes
Gold Exchange Traded Funds
Real Estate ETFs.
Tea, biscuits
& some risky business
All ve of them were peacefully sipping on their tea, munching on their biscuits, and listening to
the birds chirping in the trees outside in the little garden that Mr. Sen had kept and tended to so
dearly, when Sid, seemingly struck by some kind of brainwave, broke the silence with a jumpy,
But what about the risk involved in investing in mutual funds? And how badly is it likely to aect
my returns? Surely theres got to be some kind of risk level or some downside, because right now
its just sounding way too good to be true. Im really not that big a risk-taker I mean, the riskiest
thing Ive probably done is get married, and as all of you will attest to, that took me a good bit of
familial goading, too. So, taking nancial risks at this juncture, when its my familys well-being
at stake, I just dont know if Im game for it.
Again, Sid, RELAX! came Ashwins concerned response. Just hear Mr. Sen out; Im sure hell iron
out all your worries, if only youd give yourself a minute to breathe without getting all frantic and
frenzied! Wont you, Mr. Sen? asked Ashwin, as he looked over at a pensive Mr. Sen. Although Mr.
Sen looked like he was in a parallel universe; he was actually very much involved in the present.
Putting down his cup and saucer, Mr. Sen put his arm on Ashwin, and looked in Sids direction,
Sid, Ashwins right, theres no reason to get so ustered. Im here to help you. Sid, evidently
embarrassed, took a deep breath and calmed his haywire nerves. Once hed composed himself,
Mr. Sen continued, You ask about risk and return two very critical, pertinent points when it
comes to mutual funds. The thing about risk and return, in general, for any nancial
instrument/product, is that they go hand in hand. Theyre two sides of the same coin, i.e. if the
risk is low, the returns will also be low, and if youre expecting high returns, then the risk youll
have to take will also be high. So, theres really nothing like a free lunch, then, joked Vivaan, as
the others joined in the humour. Indeed there isnt, continued Mr. Sen, the thing about mutual
funds is that they invest into underlying assets that are in line with the scheme objective, and
thus, the risk you carry is nothing but that of the underlying asset. And it is here that the expertise
of the fund manager comes into play. Good fund managers will aim at maximising returns while
simultaneously minimising risk.
Is there any way I, as an investor, can reduce my risk exposure? Are there any forces under my
control by which risk can be minimised, because if so, at least I would have the satisfaction of
knowing that I didnt overlook anything? questioned Sid. Yes, Sid, as a matter of fact, you can
minimise risk by diversifying your portfolio across various asset classes and products,
particularly assets with lower correlation. By this, what I mean is that dierent asset classes react
dierently to varying macro-economic conditions. So while gold might be doing well today, it
could probably see a reversal in fortunes next week, when equities might have picked up.

Because theres no way of predicting the volatile market, diversication is the way to go that
way, if one thing doesnt work in your favour at some particular point, another might. There you
have it Sid Dont put all your eggs in one basket, said Vivaan, nudging him with his elbow. To
continue, Sid, that was one way of going about being cautious. Another way you can go about
reducing your risk exposure is by staying invested for the recommended investment period. Let
me explain this to you via an example: Say youve invested in a debt fund; now, if the holding
period (also called the investment period) therein is more or less similar to the average maturity
(the weighted average of maturity for all debt instruments in your portfolio) of the debt fund
managed by your fund manager, your returns will at least be the equivalent of your YTM
(Yield-to-Maturity, or the weighted average coupon of all debt instruments at the time of
investing). Along the same lines, a volatile asset class like equity, risky though it may be, can give
high returns if the investment horizon is, say, 5 10 years, responded an erudite Mr. Sen.
As Sid digested this, Mr. Sen, said, I know Ive thrown you a curveball here with all these
jargonised terms, but again, as Id said earlier, feel free to let me know if its all gotten too much
for you. Not at all, Mr. Sen. I mean, it is quite a mouthful to swallow in one go, but Ive always
had a healthy appetite, teased Sid, chowing down on a cream-lled biscuit, Ive quite
understood all that youve said, and I think Im going to be more of a risk-taker now. Better late
than never, like they say, huh?
Takeaways
Fund managers will aim at maximising returns while simultaneously minimising risk
You can minimise risk by diversifying your portfolio across various asset classes and products,
particularly assets with lower correlation.
Creativity lingers in
those nimble fingers
The evening was getting on as the party took a breather, and sipped on what was their third
round of tea. Kabir was the rst to pierce the stillness and tranquillity, Mr. Sen, to tell you
frankly, Im quite taken with this whole mutual funds concept. I mean, Ive always had a
somewhat vague idea of it because of my latent interest in nance, but I never really knew the
nitty-grittys of it. Like Sid, I was always under the illusion it was some kind of ugly
nancial-guzzling monster, too complicated for me to even try understanding. But now, having
heard you explain it so lucidly, I must say its been revelatory. It most certainly has, joined in
Vivaan and Ashwin. Well, Im glad you lads havent snoozed as yet, given that none of you were
fans of nance. If memory serves, I remember the days when each of you would promptly dart to
the door the minute Id utter the word nance, and ask you youngsters to take out your nance
text books. Oh well, those were the days, and Im just going to compliment my tea as having had
a stellar eect on you, keeping you fellows awake, and more importantly, attentive, this long,
chuckled Mr. Sen. Following a few minutes of laughter, Vivaan pointed out, Well, Mr. Sen, your
tea has always been exceptional, but equal credit to your way of narration.
Mr. Sen waddled back into the kitchen to rell the empty teapot, and Vivaan and Ashwin went in
after him to lend a helping hand. As the three pottered around in the kitchen, the clinking and
clanking of utensils disturbed Sids momentary slumber. Kabir and Sid had remained back in the
hall, taking the opportunity to relax their minds a bit. As the cuckoo clock (whats an old mans
house without the faithful cuckoo clock?) struck 5, the kitchen party waltzed back into the living
room with replenishment aplenty. Having taken their designated seats once again, the boys
continued feeding and watering themselves, while Mr. Sen slouched in his grandfather chair,
observing them keenly, and thinking of days gone by when hed be chasing them around the
living room, trying to get them seated for their tuition. His ashback was brought to a grinding
halt by Sid, who having abruptly put his cup and saucer down onto the table, spluttered from his
crumb-lined mouth, Hey, Mr. Sen, think you could explain this process to us with a visual? You
know, if you could graphically represent this, itd be super! Believe it or not, Im still a child at
heart; and like the good old days when your caricatures and doodles were what really encouraged
me to learn, I still believe that today, your creativity by way of a graphical representation would
greatly help me us, rather fully understand the scope and workings of this concept. The other
lads faces lit up at this for they had all always been ardent fans of Mr. Sens cartoonist side, and
all nodded in unison. No pressures, Mr. Sen. We really dont want to inconvenience or stretch
you, but in all selshness, wed love to see one of your nancial sketches again. After all, it was
your sketches and doodles that spurred us on to really understand concepts, rather than just

learn by rote, said Kabir, with an earnest, yet imploring look at Mr. Sen. All this while, Mr. Sen
hadnt said a word. The four friends exchanged rapid glances, afraid that theyd overstepped their
boundaries. Im so sorry, Mr. Sen. I think Ive just got carried away, and run my mouth. Really, its
bad enough that weve troubled you with lunch and tea preparations, and now dumping my
nancial woes on you I understand that its unfair. So, just scrap that; it was never said, okay?
said Sid, visibly ashamed. So, Mr. Sen, hows the garden-sprucing coming along? What have you
been growing of late? asked Vivaan, in an eort to digress, and completely divert Mr. Sens
attention.
While the boys were all in a tizzy over this, Mr. Sen calmly got up, steadied himself, and without a
word, hobbled into his bedroom. The tension in the living room was so thick at that point that a
knife could have sliced it clean. The boys, worried about the consequences of having run their
mouths, deliberated over how to go about handling the situation. While they frantically debated,
Mr. Sen reappeared from the connes of his bedroom, sketch pens and paper in hand. Seated on
his grandfather chair, he drew the table near to him, and set down his stationery. Perceptibly
baed, Sid was quick to say, Oh no, Mr. Sen, theres really no need. I was being thoroughly
unreasonable, and I apologise profusely. Lets talk about that garden of yours, huh? Mr. Sen,
having arranged his equipment neatly on the table, looked up at the four worry-stricken faces of
his pupils, and let out a jolly laugh. Well now look at you fellows; your faces are absolutely white
with terror! Whats the matter? Did I scare you so? Ive never seen such expressions on your faces
even as young lads when you mischievous brats would fare poorly in my tests! I look like Ive put
the fear of the Devil in you, said Mr. Sen. He continued, Inconvenienced me? Oh please! I cant
tell you how thrilled I am, Sid, and all of you, for taking such an active interest in these matters.
And Im even more thrilled that you remember my drawings! This old fool is a happy man, today.
Now, take it easy, and lets get right to it, shall we?
As the boys heaved a sigh of relief, Mr. Sen picked up his sketch pen, and a wave of nostalgia hit
all present, as they looked on eagerly.
(Illustration)
And thats the process lads as easy as that, said Mr. Sen, setting down his sketch pen. Aside
from that brilliant illustration, the four lads were amazed at Mr. Sens deftness. His skill hadnt
changed one bit, and his years hadnt wavered his steady, artful hand. Wonderstruck, Sids jaw
managed to relocate itself, as he exclaimed, WOW! I mean, this is top-drawer stu Mr. Sen. I
cant begin to tell you how this sketch of yours has simplied the mutual fund concept for me. I

guess what Im trying to say is that Im blown away. Thank you!
Beaming, Mr. Sen replied, Au contraire, Sid, Im thankful to you. You dont know what kind of joy
you boys coming here and helping me relive my professor days has brought me. You might think
its a burden, but its really what I needed. So, dont stay that tongue, and lets hear what other
doubts cloud your mind when it comes to mutual funds.
Take home more!
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All that glitters

is not Gold
Still
awestruck and unable to tear themselves away from Mr. Sens brilliant graphical
representation, the boys mumbled to themselves unintelligibly, till Sid, curious as George,
ventured once again, Well, Mr. Sen, Ive heard that gold is an excellent investment avenue from
my colleagues at work. They all insist I invest in the precious commodity, and thats just what Ive
done. Besides, gold appreciates well over time, and its a solid backup. Why then would I want to
switch over to mutual funds, benecial though they may be? enquired Sid. At this juncture,
Vivaan and Ashwin nodded approvingly in Sids direction, seemingly agreeing with his train of
thought. Gold is undoubtedly a great investment avenue, but you cannot compare it to mutual
funds. Its apples and oranges, interjected Kabir, who had a decent bit of knowledge on mutual
funds having worked briey at a mutual fund rm.
Kabir is right, came Mr. Sens austere reply, let me put it to you like this, dear lad. Gold and
mutual funds are two separate asset classes altogether, neither of which is in competition with
the other. Mutual funds simply provide a medium through which you can gain exposure to gold as
an asset class gold ETFs or gold funds. As an asset class, gold is a preserve or store of value as
you rightly noted; and hence, most see it as a way to beat ination not so much as a tool to
create wealth. Remember also that since gold is a commodity, demand-supply factors are
constantly at work, with a great bearing on its price, which is bound to uctuate. Kabir, keenly
listening on, added yet another tidbit, You see, Sid, in the last decade, gold actually stagnated for
a long while. Hence, as Mr. Sen has pointed out, it cannot be relied upon as a constructive avenue
for wealth creation per se.
Mr. Sen, evidently pleased that his student was aware of such detail, furthered, Ideally, gold
should be treated as an alternate class, and should be limited to a certain percent of your
portfolio. This exposure can however be increased or decreased based on your need and
circumstances. So, say you and Aarti have a beautiful baby girl, who one day gets married youre
probably going to want to shower her with gold then, and so can increase your exposure to it at
such times. Vivaan and Ashwin, thoroughly intrigued, put in, So, Mr. Sen, youre basically saying
that gold isnt a go-to investment asset class if youre looking to create wealth for yourself,
right? That would be correct, boys.
So, would gold ETFs be a wiser option then? Ive heard a few colleagues at work discuss gold
ETFs, and Ive always wondered, but never asked, because I knew I wouldnt have done anything
given my inherent fear, asked a thoroughly curious Sid. Yes, Sid, gold ETFs score major brownie
points over gold coins and gold jewellery, and for not one, but four reasons:

1. Its potentially cheaper to have price exposure to gold prices, as compared to other available
avenues. Gold ETFs, unlike gold jewellery have no margins, and hence, oer the lowest
exposure to gold.
2. You dont need to worry about storage and security issues
3. The pricing is completely transparent, as it is traded on the stock exchange. Hence, theres no
room for additional charges like making charges/packaging, as is the case with gold
coins/jewellery.
4. As a retail investor, its ideal, because the minimum lot size youll need to trade in is one unit
of the gold ETF, which is the approximately equal to one gram of gold. So, say you have Rs.
5,000 that you would like to invest in gold. If youre buying a gold bar/biscuit/jewellery, the
minimum you would have to purchase would be 10gms, the price of which would far exceed
the Rs. 3,000 you have at your disposal. Conversely, with gold ETFs, you can purchase even that
1gm (which your Rs. 5,000 might likely cover), and thus ETFs are a more feasible option.
Turning back to Sid, Mr. Sen nally put in, Sid, at the end of the day, gold is not tax-ecient as it
is treated in the category of debt for the purpose of tax calculations. On the other hand, equity
mutual funds are far more tax-ecient, and though risky, are a great avenue for wealth creation
and multiplication. So, dont look at gold as the be all and end all of your investments; move out
of your comfort zone, and choose to invest in mutual funds. Not only will competent fund
managers be managing your money carefully and adequately for you, but youll also be genuinely
creating wealth in the true sense of the word. And that wealth can ultimately be used to provide
your family a better life.
Takeaways
Gold is a preserve or store of value; and hence, most see it as a way to beat ination not so
much as a tool to create wealth
Gold should be treated as an alternate class, and should be limited to a certain percent of your
portfolio
Gold is a commodity, and demand-supply factors are constantly at work, with a great bearing
on its price, which is bound to uctuate
Mutual funds can provide a medium through which you can gain exposure to gold as an asset
class gold ETFs or gold funds
Gold is not tax-ecient as it is treated in the category of debt for the purpose of tax calculations.
When nothings left,

go right
As dusk began to set in, so did lethargy. Vivaan and Ashwin were visibly in snooze mode, and
Kabir had stepped out to buy some refreshments, so they didnt land up emptying all of Mr. Sens
kitchen cabinets. Sid and Mr. Sen were lively as ever, and while the others yawned and stretched,
Sid, now completely consumed in this conversation, put forth a question to Mr. Sen, Mr. Sen,
now that youve convinced me about mutual funds being a more viable investment option than
gold, how exactly do I go about picking the right fund? Is there anything like picking the right
fund, or can I put my money into any trustworthy fund? Sid, thats an interesting question
youve posed to me there. To state it plainly, picking the right fund for yourself is much like
picking out the right anything for yourself in life it involves knowing yourself, your life goals,
your risk tolerance, your attitude to investments, and the like. Scheme performance, however, is
a secondary factor. And clichd as it may sound it is true, responded Mr. Sen. As regards mutual
funds, the starting point when selecting the right fund/scheme is knowing your risk tolerance
and life goals. Furthermore, youve got to look at it from a personal nance point-of-view, i.e. the
role that mutual fund schemes play in your personal nance sphere.
All things being equal, mutual funds will always be a far less risky option when compared to
self-investing, for the sole reason of the expertise and diversication a qualied fund manager
brings to the table. And lastly, its important that you remember that most of the risk or return in
your portfolio is attributable to asset allocation, not so much your selection of a mutual fund
scheme. Hence, Id advise that you align your asset allocation with your goals and risk prole, if
you really want to optimise your returns.
Sid nodded in agreement, as the three other lads stirred from their snooze. Kabir returned from
his jaunt with three bags full, Sir, and lazily strode on over to the kitchen to assemble the
munchies in the cabinets and get some arranged for the lazy bones lounging on the living room
sofas. Mr. Sen thanked Kabir for relling his dwindling cabinet stock, and the party of ve took a
break to catch up on old times again. So about my gardening, Vivaan, that you were so
interested in a while back, sniggered Mr. Sen, its coming along well. Ive got a patch of
strawberries, one of carrots, and another of radishes. My owerbed is in bloom, and Im proud as
a peacock about that! You guys should stop by tomorrow, and you can try your hand at gardening.
Ive got to do my weeding, anyway, and could use an extra pair, rather extra pairs, of hands. What
say? Wed love to, Mr. Sen. We know that youve always looked at that garden as your baby, and
wed willingly drop by and help you out, replied Ashwin, who had always fancied and adored Mr.
Sens lovely garden. Mr. Sen, suce to say youve got yourself a pair of wonderfully nimble
ngers, the likes of which the four of us put together couldnt match, said Vivaan,

acknowledging Mr. Sens hard work, even at his ripe old age of 72.
They went on to discuss the whereabouts and whatabouts of their school professors, most of
whom were close friends of Mr. Sens, and he told them of how Mr. Gupta, the Math professor,
had gone on to become the Principal of their school, and how Mrs. Sharmas (the Geography
professor) son was now a professor in the Junior section of their school. The boys were delighted
to receive this information, and it warmed their hearts.
Takeaways
Picking the right fund involves knowing yourself, your life goals, your risk tolerance, your
attitude to investments, and the like
Mutual funds is a less risky option when compared to self-investing, for the sole reason of the
expertise and diversication a qualied fund manager brings to the table.
Decoding
the warning signs
As the evening wore on, bringing memories from bygone years with it, the mutual fund talk
seemed to fade into the background. However, after that brief lull in discussion, Sid casually
enquired, Hey, you know how these mutual fund companies always issue a mandatory
cautionary warning when advertising? Mutual funds are subject to market risks. Im sure they
are, but what does that even mean? I mean, it all seems like smooth sailing throughout, and then
they go and ash this warning, which totally nullies the elated feeling prior to that. Is there really
a lot of risk thats associated with it, or what exactly is the deal? This was a common concern
shared by all the lads, and they were eager to know what that statement really implied. Mr. Sen,
discerning their keenness, replied, Well, Sid, I must say youre in full swing on this mutual fund
bandwagon, and Im glad! Now to address that obscure statement Mutual funds are subject
to market risks. As you know, buying a mutual fund scheme for investment purposes carries a
certain amount of risk, as we had established earlier. This risk is due to the NAV (Net Asset Value)
of the scheme in layman terms, the price of the scheme which uctuates with movements in
underlying asset classes.
Right. But what about the accompanying statement Please read the oer document carefully
before investing, Mr. Sen, questioned an intrigued Kabir. Well, that is nothing but the schemes
oer document. It is essential you read that and understand it before investing in the
scheme/fund. Once youve read the schemes oer document and signed the mutual fund
application, it is deemed that you have fully comprehended the underlying risk associated with
the investments. In other words, it is akin to the Caveat Emptor or Buyer Beware principle as
a buyer/investor, you must exercise precaution before investing in a mutual fund scheme. Once
your signatures on that oer document, it means you have fully read and wholly understood the
responsibilities and liabilities, replied Mr. Sen.
And what if I realise much later that my fund manager was not ecient enough or bungled up
somewhere, and that the fund hasnt given me the returns I was expecting? asked Sid. Ah, well
I was just getting to that. Well, Sid, in the event that you decide to register a complaint against
the scheme, you wont have much recourse with the regulator or even with the consumer forum,
particularly if youve signed the application form for the investment. You can, however, always
lodge a complaint with SEBI (Securities and Exchange Board of India). But ultimately, that
signature of yours carries a lot of weight so while your fund manager may be majorly
responsible, you are equally responsible for not having done due diligence on your part, and
plunged into it blindfolded, replied Mr. Sen. However, if somehow it is proven that someone had
missold the scheme to you, the chances of which are pretty remote, then maybe you stand a

chance of recovering your investment. Hence, the regulator, i.e. SEBI, wants you to know and
understand, from the very outset, the mandates the fund houses display on their various
communication and promotion platforms. He continued, SEBI has in fact recently started the
practice of colour-coding of funds for easier identication of underlying risks. So, brown
indicates high risk, yellow indicates medium risk, and blue indicates low risk. It is always better
to be cognizant of the risk upfront, rather than it lying hidden and then blowing up in your face at
a later, irretractable stage as is the case with a lot of traditional modes of investment.
That reminds me, Ive heard that a lot of chit funds have got a bad reputation, because the risks
are not known upfront, and gullible investors are lured into it, interjected a smug Kabir, quite
pleased at his two paise bit of information. Thats right, Kabir, and never forget the principle
Risk and return are two sides of the same coin, replied Mr. Sen. Taking it further, Mr. Sen said,
In fact, and this may surprise you, even investing in your favourite xed deposits is quite the
same. Essentially, banks and mutual funds do the same thing; the only dierence being that the
way banks work is not known to us, while mutual fund developments are more transparent, and
this transparency sometimes tends to scare us. So, what happens with banks, Mr. Sen? asked
a ummoxed Sid. Mr. Sen continued in the same vein, You see Sid, when a bank oers you 8.5%
interest for 3 years on your FD, your underlying investments go into debt instruments, much like
any other debt fund, or even closer to home, FMPs (Fixed Maturity Plans). A part of the money is
also lent to other investors, and this carries credit risk, i.e. the risk of the investor not paying back
the interest, principal, or both. So a lot is dependent on the investors also. Now, the likelihood of
most large, well-capitalised banks slipping up is not very large, but thats not to say slip-ups will
never occur it has happened in Europe.
With mutual funds, agreed, you are privy to your moneys movements on a daily basis on some
days it does well, and on others, its a little disappointing. These highs-and-lows particularly the
lows tend to surprise the investor sometimes. And then theres the subsequent
hyperventilation, over-exaggeration, and worst-case scenario scenes that result in hasty
decisions and grave upsets. However, as noted, such transparency is actually better than the
obscurity (more like opaqueness) of a bank investment. And remember not taking risks is also
a risk!
Sid sat mulling over Mr. Sens words, as the others shued around nervously. All this talk of risk
had rattled them a bit, and Mr. Sen, picking up on this, by and by assuaged their fears, I can tell
that all of you are a bit wound up with all this risk talk. But look, heres what youve got to

understand risks are an inevitable part of life. A large part of the responsibility lies with you in
being prudent and pragmatic when taking important investment decisions. And thats why
youve come to me, isnt it? Not to boast, but I do pride myself on dispensing sound nancial
advice. So, cheer up, and dont let risks keep you tethered to one denite spot. Whats important
is knowing the right risks those worth taking and proceeding with utmost caution. Now, lets
proceed, shall we? Theres still a good deal to clear out.
Takeaways
Mutual funds are subject to market risks refers to the risk due to the NAV (Net Asset Value)
of the scheme which uctuates with movements in underlying asset classes
With mutual funds, you are privy to your moneys movements on a daily basis, so theres a
great deal of transparency
Not taking a risk is a risk in itself.
Fat Lees &

timing details, please!
Having heard an exhaustive amount on the risks associated with mutual funds, the four friends
were suciently shaken, but Mr. Sens pearls of wisdom towards the end had soothed their
nerves to some extent. The clock now struck 7, and the streetlights came on, as the birds uttered back into their nests in the trees. Vivaan had picked up Mr. Sens crafty sketch on the
Mutual Fund concept, and was poring over it with Ashwin, as Kabir and Sid had a brief tete-a-tete
on the mutual fund concept given that the two of them were more in the know-how than the
other two, and had displayed a keen interest all along. In the meanwhile, Mr. Sen dialled Fat Lees,
an excellent little Chinese restaurant down the road that had been around for donkeys years (and
from where hed often order food for the boys when they were under his tutelage), to order some
Chinese grub.
Well, Ive placed an order with Fat Lees, so dinner should be arriving soon for you hungry wolves.
I can see that the mere mention of it has whetted your appetites. Ashwin, stop drooling! I purchased that sofa coverlet just last week! exclaimed Mr. Sen, evoking resounding laughter from
all present. Yeah, Ashwin, control your stomach, you glut. Its always got the better of you,
winked Vivaan. If youre implying that Im fat, Ill have you know that Im a growing man, and
what you call pleasantly plump, came Ashwins humorous retort. Growing, indeed, chortled
Sid, and the entire party was in splits. Alright boys, lets lay o poor Ashwin and his stomach
now, said Mr. Sen, with a gentle smile in Ashwins direction, who had somehow managed to curb
his drooling.
Post this exciting leg-pulling session, the boys composed themselves, while oating images of
chicken lollipops, wantons, hakka noodles, and Kung Pao potatoes clouded their minds. Sid however, was intent on learning the ins-and-outs of mutual funds; and tempting as it was, he managed to shove these distracting tempting images out of his mind. Sorry to burst your bubble,
guys, but Ive got another mutual fund query, said Sid to an evidently irritated bunch. The riskreturn conundrums aside, say I do decide to go ahead and invest in a mutual fund, Mr. Sen. What
would you say is the ideal time to stay invested in a fund? How do I go about planning out my
investments in order to make the most of them? How do I take a call on the tenure when to stay
invested and when to redeem? How do I... he trailed o, rather breathlessly. Amused by Sids
urry of thoughts and onslaught of questions, Mr. Sen placed his hand on Sids shoulder, and got
on with the pith of the matter. Sid, I would say that the ideal time for investment in a mutual
fund depends on the schemes you choose to invest in, as also the time horizon of the goal for
which you have invested. To break it down for you, here are recommended time horizons for
varied mutual fund schemes:
Ultra short
term funds
Cash Funds
1 month
1 day
Income &
Gift funds
6 months
3 months
Liquid funds
Balanced
funds
2 years
1 year
Short term
funds
5 years
3 years
Monthly
income plans
(MIPs)
10 years
Equity &
gold funds
What Ive outlined are basically broad ballpark gures; the actual recommended investment
horizon will be decided basis the underlying scheme and your objective. For this, needless to say,
a nancial advisor will prove handy. That said, generally speaking, Id say you should remain
invested till such time as there is no urgent need for money or liquidity.
Sids breathlessness and over-eagerness had subsided, and he seemed to be at ease post Mr.
Sens explanation. Sorry about that non-stop questioning earlier, Mr. Sen. I really dont know
whats gotten into me today, said an embarrassed Sid. Oh, Sid, well its the same thing that gets
into you every day, came Vivaans cheeky response, Dont bother now, we can tell youre clearly
highly interested not to mention, invested in this conversation, if you know what I mean. Sid,
no novice to his friends tomfoolery, picked up on the pun, and smiled a wry smile. Come on now,
Vivaan, give Sid a break. Im impressed at his active interest in this topic, and itll behoove you to
follow his cue, because it could bode well for you, too, said Mr. Sen, having invoked the professor
within him once more. Im sorry, Mr. Sen, I didnt mean to make light of the situation or anything.
I was just teasing, replied Vivaan, shamefacedly. No worries, son, said Mr. Sen, and relapsed
into his professor-y Zen state of mind.
Takeaways
The ideal time for investment in a mutual fund depends on the schemes you choose to invest
in, as also the time horizon of the goal for which you have invested
You should remain invested till such time as there is no urgent need for money or liquidity.
10
After a while, an agitated Ashwin asked, My stomachs growling! Shouldnt dinner have been
here already? Christ, Ashwin! Its only been a half hour since Mr. Sen placed the order. You mind
exercising some patience, or would you rather they send across half-cooked food, you greedy
dog? Here, munch on these salted wafers in the meanwhile, replied Kabir, handing the bowl of
chips to Vivaan, to pass on to Ashwin. By now, youve probably ascertained that Ashwins
stomach was a bottomless pit, but that was quintessential Ashwin, right from his childhood days.
Food had always been his best friend and any type of food was comfort food for him.
To divert Ashwins non-stop food jibber-jabber, Vivaan turned to Sid and asked, Hey Sid, if I
recollect correctly, when we corresponded via e-mail a few months ago, youd mentioned to me
that you were on the lookout for a new place. Was that just a spur of the moment thing, or are you
seriously looking? Actually, it was a spur of the moment thing then, but since Aartis pregnancy,
its become a serious thing. Earlier, it was about wanting to move out of my parents place; now
its become more of a necessity. I mean, I love my place right now, and having the grandparents
around the little one when he/she arrives will undoubtedly be a blessing, but I cant rely on my
parents support forever, you know? At some point, I need to move out, live independently, and
support my own family. Not that my folks will mind on the contrary, theyd be more than willing
to have us here, and take care of the little bundle, but I just feel a bit iy about it. Truth be told,
theyve been absolutely stellar parents always provided for me, been there for me and Aarti in
both good and trying times (often even nancially), and the best part was that it was completely
unconditional. I feel like Im now at that junction in my life where I need to give back, and so
moving out and lessening their burden (although of course, they dont see it that way at all) is a
priority. Besides, my place is no mansion, and with a child on the way, I think theres no better
time to make the transition, said Sid, rather dejected, and evidently upset. You look pretty
down about this, Sid. I had no idea this was such a troublesome issue for you. Im sorry to have
brought it up at all. Had I known... Vivaan trailed o. Oh no, dont be silly! In fact, you bringing
it up has actually strengthened my resolve to set that ball in motion. Ive been sitting and mulling
over this for way too long now. Its just that Id ideally love something in this locality, because
well, you know, Ive got my folks here, my place of work is just a 20-minute ride, the
neighbourhood is great, and most importantly, Im so comfortable here. I know life is all about
moving out of your comfort zone, but right now, Im still looking in and around our locality itself.
The only glitch is the realty prices I get a mini heart attack just thinking about it. Ive actually
approached a few banks and enquired about loans, so now its just a matter of zoning in on one,
and taking that rst step, you know? said Sid, in an attempt to pep himself up.

All this while, Mr. Sen sat quiet and listened intently. Im sorry, Mr. Sen, I was just telling Vivaan
about my need to buy a place for my family; didnt mean to ignore you deliberately, said Sid,
realising Mr. Sen hadnt said a word. Yes, Mr. Sen, apologies on my behalf, too, came Vivaans
reply. Alright guys, I say its time for a game of cards with Mr. Sen just like old times. What say,
Mr. Sen? said Kabir as he looked approvingly at Mr. Sen. Cards in a bit, boys, came Mr. Sens
sober reply, right now, Ive got some unnished business with Sid still. Sid, being the frightful
sort, recoiled in fear of having done or said something untoward, and sweat beads dotted his
lined forehead. So, from what Ive heard, you plan on buying a house, right Sid? A house in this
locality to provide a better life for your family, ease the burden on your ageing parents, and to
some extent, maybe prove to yourself that you are in fact capable of being nancially
independent, correct? A nervous nod in agreement from Sid, and Mr. Sen continued, You speak
of applying for a home loan with a bank, and doing leg work for the same. Thats commendable,
really. Most people tend to jump into applying for a loan without so much as weighing their
options the pros and the cons. However, theres another window open to you thats currently
unseen. Tell me, have you heard about goal-based investing, Sid?
I think Ive read about it a couple of times in the newspaper, Mr. Sen, but I havent really paid
much attention to it. What does that have to do with buying a home anyway? Or for that matter,
whats it got to do with mutual funds? enquired Sid, perplexed beyond reason. Sid, goal-based
investing is interlinked with mutual funds. You can actually do goal-based investing with a
mutual fund; and with time youll be able to predict a certain percentage of returns, accordingly
being able to eectively plan investments. So, instead of opting for a loan which Im not saying
you need to rule out altogether you have the option of systematic goal-based investing in a
mutual fund, with one of the goals being buying yourself a house. Now, if you dont mind my
asking, how urgent is your situation? The way I see it, this is your rst child, and youre still nding
your feet so far as your career is concerned. Why rush into buying a home? I understand that it
gives you a longer time window to pay o the loan (while youre young and earning), but wouldnt
it be better to wait a few years maybe? Personally, I think your child will need his/her
grandparents, and so will you! Being new parents is no cakewalk, and instead of Aarti having to
gure it out alone, wouldnt it be better if she had your folks helping her out at least initially?
said a concerned Mr. Sen. Well, now that you put it that way, replied Sid, musing, I never
thought of it like that, but it actually does make a good bit of sense. So, say I avoid the home loan
for now, and decide to go in for this goal-based investing thing. What am I getting into exactly?
Alright, so goal-based investing is a process that helps you plan your investments you dene

your goal, estimate the corpus you will require to full the goal, and the time available to full
your goal, and make general assumptions about your investment returns and ination. Based on
these variables, you will be provided with the recommended asset allocation and amount to be
invested regularly. So, if your goal is buying a house, you will need to set a time horizon, estimate
the amount you will need to invest over that period of time, and make certain assumptions on
your returns and ination based on your discretion. This will then help you allocate your funds in
concordance with your goal. If youve got multiple goals, you will have to invest multiple amounts
to achieve those goals, and each goal will have to be tracked and reviewed separately.
Success from goal-based investing comes from correctly dening the variables, exercising
discipline with your asset allocation, and investing regularly. In todays dynamic world, things
change at a rate one cant keep pace with, and so you need to review your goal-based asset
allocation portfolio every 6 months to ascertain whether its in line with the goal, or whether
some variables have changed, causing your portfolio to need some correction. Continuing, Mr.
Sen said, What Im trying to say is that you could look at goal-based investing with mutual funds
as a viable option for buying a home. Sure, you might have to postpone your dream of getting that
home of yours a bit, but youve got time on your side. Also, this approach to investing will instil in
you a sense of sincere discipline when it comes to your nances, and that kind of nancial
discipline is what will go a long way in helping you provide a better life for your family.
Well, I guess it makes more sense to wait a few years rather than be impatient and impulsive and
jump into this house-buying. Besides, it does make sense, practically, to wait till Ive got a healthy
bank balance, said Sid, having calmly listened to Mr. Sens reasoning, and having understood
where he was coming from.
All the while, Ashwin was stung his face happily with chips galore, relling the bowl every 5
minutes, as the others looked on in daft amazement, wondering what havoc that was going to
wreck on his stomach the morning after.
Takeaways
Goal-based investing can be clubbed with mutual funds, and with time, one can predict a
certain percentage of returns to fulll certain goals
Success from goal-based investing comes from correctly dening the variables, exercising
discipline with your asset allocation, and investing regularly.
11
The aftermath of Ashwins chips

& the thing about SIPs
And so, after that chips-munching rampage that resulted in non-stop disruptive belching, the
doorbell nally rang as the clock struck 8.20 p.m., and Ashwin sprinted across the living room like
an athlete in the Olympics (funny part being he and an athlete were polar opposites) to make sure
he was the one to answer the door. Hell hath no fury like Ashwins stomach scorned. After giving
the shocked delivery boy a mouthful for the late delivery (over 45 minutes!), Mr. Sen appeared,
apologised for Ashwins little rant, told the delivery boy to attribute it to a cranky hungry man,
and threw in a good bit as a tip for the poor fellow.
Ashwin dashed into the kitchen and took it upon himself to get the food ready in serving bowls;
Kabir helped Mr. Sen out with arranging the plates and getting the table ready; and Vivaan and
Sid settled and tidied the undone sofas in the living room before heading into the dining room to
eat dinner. Food was nally served, and everyone took generous helpings Ashwin taking the
most generous of them all, of course. Hey Ashwin, there are ve of us here. Just saying, said a
lter-free Vivaan, chuckling. Just look at him stung his face! Kabir exclaimed, hes not even
bothering to look up from that plate of his. We might have met up after years, but tonight I have
my doubts concerning his loyalties. Guys, I think weve been replaced by those chopsticks. The
entire room erupted with laughter, save Ashwin, who was still blissfully gobbling his food like a
child eating candy.
After two helpings, Ashwin somehow managed to draw himself away from his plate of food, and
with half a mouthful of food, uttered, Excellent stu! Really, Fat Lees hasnt changed a bit.
Those wantons were a slice of Heaven! Well Im glad you enjoyed the meal, Ashwin, said Mr.
Sen, as he reminisced about his tutoring days, when Ashwin was just the same greedy glut he was
now. Some things never change, Mr. Sen mumbled to himself with a soft smile on his face. Post
the meal, everyone was too stued to move. I feel like my pants are suddenly two sizes too
small, said Vivaan. Sid reiterated the sentiment, and added, Just like your brains, and the
entire company burst out laughing hysterically. As they sat like logs at the table, biding their time,
waiting for those humongous portions theyd chowed on to digest, there was some much-needed
silence; the kind of self-satised silence that needs no explanation. And while Ashwins thoughts
were axed to dessert, Sids thoughts hadnt seemed to stray from his mutual fund quandary.
Vivaan left the table briey and headed into the kitchen saying, Im going to go get another
bottle of water to sip on. Anybody want anything from there? Ashwin? Ashwin was still
daydreaming about honey noodles and ice cream, when Sid very rudely interrupted his sweet
dreams and boomed across the room, Vivaan, youre a genius! I knew there was something that
I was missing out on. Mr. Sen, Ive been meaning to ask you this all along, but it kept slipping my

mind for some God forsaken reason, he said as he directed his gaze at Ashwin, who, not
oblivious but not perturbed by the gibe, was still chewing his last morsel of food, and ruminating.
Carry on, Sid. What was it that youve been meaning to ask me? said Mr. Sen.
A lot of the lads at work talk about these SIP things. Ive enquired a couple of times myself, and
it seems like a very in-demand thing. A lot of my colleagues have even recommended I invest in
SIPs. Since they all swear by it, I thought Id follow the herd. But, since were having this talk now,
I was wondering if maybe you could throw some light on what they are exactly? said Sid. Ah,
SIPs! Yes, everybodys heard of SIPs, Im sure, he replied, as Vivaan pranced back into the kitchen
enquiring, what was all that genius talk about now, Sid? Mind elaborating? Weve got a good bit
of time to discuss that, he said as he took his seat at the table, with a sly grin across his face.
Oh, get over yourself, already, Vivaan! Were talking about SIPs now. Your genius will just have to
wait, said Sid, as Vivaan gave up. No point persisting with this nancially-charged fellow
today, he mused.
Once this trivial bickering was done, Mr. Sen resumed, About Systematic Investment Plans, or
SIPs Yes, Sid, these are highly suggested for volatile asset classes like equities and gold. Hence,
if youre investing in equities, gold funds, or even balanced funds, SIPs would be the
recommended way to go. Moreover, SIPs are a great way to inculcate some valuable nancial
disciple, because it deals with the concept of regular investing, market movements aside. So,
its sort of like the saying, Oceans are nothing but drops of water, one at a time, then? said
Ashwin, causing everyone to jerk their heads in his direction, surprised that hed actually been
listening in. What? Now that Ive got food in my belly, Im good to go, he said nonchalantly.
Well, that was rather unexpected, but yes, Ashwin, thats precisely what SIPs are. To get a bit
technical, SIPs come with a minimum investment of Rs. 500 to Rs. 1,000; and hence, one can start
small, and start early, greatly beneting from the powers of compounding. So, you dont need to
invest some mammoth sum to get started. Additionally, SIPs work on the principle of Rupee-Cost
Averaging, wherein the uctuations in the market and Rupee-Cost spectrum eventually end up
balancing themselves out. This principle benets the investor such because you are investing
every month, irrespective of the market value you buy at high and low or NAV, it helps bring down
the average cost of acquisition, as it captures the highs and lows of the market at various points
of investment.
Hmm. Sure sounds interesting, Mr. Sen, said Sid, I think Im going to consider this SIP thing.
Thats good to hear, Sid. And I can see a marked change in you demeanour since you came in.

That gives me immense joy, and Im glad I had a role to play in it, said a kind Mr. Sen.
Hey guys, lets clear out the table, and save Mr. Sen the trouble, huh? I think weve troubled him
enough for one day, and Id reckon its high time we head home, said a reasonably exhausted
Kabir. Yeah, Mr. Sen, you need to catch up on some sleep, and weve already overstayed our
welcome, said Vivaan, as he started clearing away the plates and glasses.
Takeaways
SIPs come with a minimum investment of Rs. 500 to Rs. 1,000; and hence, one can start small,
and start early, greatly beneting from the powers of compounding
Because you are investing every month, it helps bring down the average cost of acquisition, as
it captures the highs and lows of the market at various points of investment.
Take home more!
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This product is suitable for investors who are seeking:
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their principal will be at low risk
(YELLOW) investors understand that
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(BROWN) investors understand that
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Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
Mutual Fund: Birla Sun Life Mutual Fund. Asset Management Company/Investment Manager: Birla Sun Life Asset Management Company Ltd. Registered Office:
One India Bulls Centre, Tower - 1, 17th Floor Jupiter Mill Compound, 841, S. B. Marg, Elphinstone Road, Mumbai - 400013.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
12
As the four friends started wrapping matters up, Mr. Sen became pensive, and looking at the
boys, wondered at how theyd all matured. He thought of the old days when the four of them
would leave the place in a mess, wreak havoc, and leave without so much as straightening a
cushion. And how today, things had changed so dramatically, with them clearing up, and helping
out, so as to not increase Mr. Sens workload. Today, they were all grown up and responsible, but
still the same children at heart. How fast time ies thought Mr. Sen, and he welled up, but
instantly composed himself lest the boys see him vulnerable. Hed always been such a strong
father gure to them something of a bulwark that he didnt want to tarnish that image by
showcasing his sensitive side. Not that he had anything to be ashamed of, but the day had just
been so perfect, and having not had such company in years, it was only natural that Mr. Sen felt
this medley of emotions.
As he sat silently at the table, Kabir came up behind him, placed his hands on his shoulders and
said, Well, Mr. Sen, weve cleared it all up. The dishes are all washed and have been put back in
their designated places yes, we still remember them. Surprisingly, Ashwin was able to tear
himself away from the cookie jar, and help us out as well. Quite an accomplishment, Id say!
Well, look, I believe in living life King size, and so what if Im given to hedonistic delights? Come
on now, dont tell me you dont agree, Kabir. You were quite the foodie back in the day yourself.
Whatever happened to that? asked a curious Ashwin. Im still very much that foodie, Ashwin.
Just that I believe other things in life trump food, unlike you! replied Kabir. Ah well, to each his
own. But Ill say this I rmly believe that the way to a mans heart is veritably through his
stomach, said a smug Ashwin, to which Vivaan was quick to respond with, God bless your wife,
Ashwin! Heaven knows what a storm she has to cook up in the kitchen to please you, you
insatiable lump of lard!
The laughter that proceeded aided digestion a great deal. As they packed their things and got
ready to leave, Sid had one last mutual fund query, but he proceeded with caution, Mr. Sen, if you
dont mind, theres just one last doubt Id like claried with regards mutual funds. If youre too
tired, and I can tell that you are, Ill desist. Its just that youve been so frank and explained this so
wonderfully to me, I couldnt dream of going to another to ask now. Nonetheless, theres a time
and place, so if youre not up for it, Ill pester you another day. Dont be foolish, Sid, ask away.
The four friends encircled Mr. Sen as he sat on his grandfather chair a throwback to their
younger days, when theyd huddle around him in much the same manner, when hed patiently sit
down post tuition to tell them stories personal life stories, and also ctional ones that he was
great at coming up with.

Does it make sense for me to take a loan against mutual funds, Mr. Sen? asked Sid. Mr. Sen
heaved a sigh, and said, Yes, Sid, you can certainly take a loan against your investments in
mutual funds. Most banks provide loans up to 50 85% of the value of your investments in
mutual fund schemes, depending on the type of scheme youve invested in. Broadly speaking,
cash funds/liquid funds with lower downside risks can get you 80 85% of the value of your
investments; equity funds, however, have higher downside risks, and hence qualify for lower
amounts so say 50% of the value of your investments. So its kind of like leveraging, said
Vivaan, rather doubtfully. Leveraging and all big terms, Vivaan! Have a heart Im a nance
newbie, and youre throwing around jargonised terms while Im still adjusting myself to this
whole mutual funds business, said Sid, jokingly. Correct you are, Vivaan, replied Mr. Sen, Im
impressed that youre aware of the concept. In truth, taking a loan against mutual fund
investments is no dierent from leveraging, and hence, Sid, you shouldnt use this as an
investment strategy; rather, use it only if you are in dire need of temporary investments, and
wouldnt break the investments intermittently before the advised time period. You see, the
lending entity in this case the bank will advise the mutual fund to mark lien (something like a
security) against the units on which the loan has been provided; hence, you wont be in a position
to redeem the money till such time as the lien marking is removed by the fund. And this will only
happen once the bank gives the go-ahead to the mutual fund house post the repayment of the
loan by you. For example, say youve opted for a home loan the bank will mark lien against your
property; this means that the bank will hold the property till you pay back your loan if you
default on your obligation by failing to disburse the loan amount within the specied time period,
the house will be conscated. So, its actually a bit tricky; and youve got to tread carefully.
Takeaways
Most banks provide loans up to 50 85% of the value of your investments in mutual fund
schemes, depending on the type of scheme youve invested in
Taking a loan against mutual fund investments is no dierent from leveraging, and hence, you
shouldnt use this as an investment strategy; rather, use it only if you are in dire need.
13
Teary eyes, sad goodbyes,

& an unexpected surprise

If thats all, inquisitive Sid, can we say thats a wrap? asked Ashwin, whod noticed that Mr.
Sens eyelids were gently drooping, but doing their very best to keep open. Thats all, folks! said
Sid, doing his best Looney Tunes Porky Pig impersonation. The boys all embraced Mr. Sen before
leaving, telling him to get some rest, and thanking him unceasingly for his hospitality. Today was
special, Mr. Sen. Were so touched that you think of us after all these years, said a bleary-eyed
Vivaan. Really, Mr. Sen, if it werent for your phone call, I think wed all have drifted apart for
good. Lifes a pretty cruel teacher, and weve come to learn that today, continued Kabir. Mr.
Sen, you take care of yourself, and get some sleep. Its been such a whirlwind, this day, but of the
best kind, and I know none of us are ever going to forget it. Well drop by tomorrow maybe once
again to help you with the gardening. I mean, Vivaan and I have taken a couple of weeks o from
work, so we could do this again? he said, as he looked over at Vivaan. Oh, of course! came
Vivaans blazing reply, and Ashwin topped it o with, and the next time, lunch and dinner are on
me. They better be, considering you eat 60% of the food! said Vivaan. Lastly, Sid turned to Mr.
Sen, and embracing him like a boa constrictor, said, Mr. Sen, you dont know how much your
patient advice has meant to me. Really. Ive been so fraught with anxiety about this for the
longest time, and I just didnt know who to talk to. Im terribly sorry for this barrage of questions
and outburst of emotions today, but I cant quite talk to anyone else the way I can to you. Please
know that you hold a special place in all of our hearts, and forgive us for not staying in touch. I
think I can speak for all of us when I say youre a godsend in every sense of the word. I hope I
havent hassled you too much today, and if Ive overstepped any lines, please pardon me. Ill
always be eternally grateful and indebted to you for your love, care, concern, advice, and wisdom
that have been a constant.
And so the oodgates opened for all. You know I always have and always will be there for you
boys, said a deeply touched Mr. Sen. Well now, Im glad you boys have all taken away something
from todays get-together. It really was wonderful catching up again, and I hope to see all of you
back here soon maybe to play that game of cards that we missed out on today? And some
gardening too, perhaps. But for now, Socrates beckons, and I must answer, so o with all of you
now! Goodbye and goodnight! said Mr. Sen as he shut the door after them, bidding them
farewell.
Having switched o all the lights, Mr. Sen, bespectacled, and with Socrates in one hand and a
glass of warm milk in the other, had just about entered his bedroom and was getting ready to
settle comfortably into bed when the doorbell rang. Alarmed at the hour, and never one for
entertaining guests much, Mr. Sen switched on the living room light, carefully made his way to

the front door, looked through the peephole, and unlatched and unlocked the door. Vivaan stood
there, alone, perceptibly jittery. Whats going on, Vivaan? Is everything okay? Has something
happened? asked a worried Mr. Sen. Mr. Sen, hearing you speak today made me realise
something youre the only one Id divulge my personal problems to. And though I havent been
expressive today, often even seeming confident and content with my success, somethings been
bothering me. Financially... said Vivaan, shedding his overconfident faade. Talk to me, said
Mr. Sen, as they sat on the bench in the garden enveloping Mr. Sens house, with nothing but the
streetlights and owls for company.
A Word from the wise

Mahesh Patil,
Co-CIO, Birla Sun Life AMC
1. What is an ideal investment philosophy according to you?

Let me start by saying that there isnt any single investment philosophy that would be
suitable for all investors. Each individual investor should evaluate his own nancial goals, risk
appetite and investment horizon to decide on suitable asset allocation. If required, one
should seek help from a qualied nancial advisor in putting together a sound nancial plan.
Investors should ideally invest in Equities for their medium to long-term needs. The
investment portfolio must be evaluated periodically (maybe once a year), and rebalanced
from time to time, with lesser exposure to risk assets as the redemption period draws closer.
2. Your advice to investors who prefer avoiding the markets following any volatility?
If we look at the past, investors who have remained invested through volatile periods have
gained much more than those who have exited or refrained from investing when markets
were volatile and low. The simple and smart way to invest is through systematic investments
in Diversied Equity Funds. Investors should continue to add exposure to equity and Balanced
funds when markets are low and volatile with small monthly contributions through SIP. Thus
he would benet from averaging when markets are low, while the fund manager uses his
expertise to allocate the funds across stocks and sectors, in the endeavor to beat market
indices and generate superior returns for the investor in the medium to long-term.
3. How critical is investor education when it comes to mutual funds? Do you think it will help
promote MF investments in a more informed manner?
Yes. It is very important for the investors to know which is the right fund for them, depending
on their individual needs. An aware investor would be able to invest in line with desired asset
allocation for his nancial goals and choose the product that is suited to his investment
horizon. This will help him identify the most suitable investment options depending on his
risk prole, investment horizon and desired asset allocation.
4. Mutual funds should cover how much percentage of our overall financial portfolio?
An investor can allocate almost all portions of his nancial investments in Mutual Funds. Of
this, long-term investments would be in Equity Funds, medium-term investments in Income
and Hybrid Funds and savings or emergency money can be parked in short-term Funds or
Liquid Funds for better returns.
5. Which sector is expected to give higher returns on investments?

We are positive on IT, Banking and Pharma sector. IT sector, a favorable tail wind in form of
stronger developed world growth and a supportive currency continue to help the sector- we
are also positive on Banking sector- which is like proxy to the economy and as the economy
tends to bottom out we could see banking beneting from the domestic recovery. Healthcare
is a sector we like. The sector has exhibited superior earnings growth over the last few years
and future earnings potential are equally promising.
6. When do you see a reversal in the interest rate trend?
The reversal in interest rate trend would depend on the ination. Currently the Reserve Bank
of India has set up a committee which will look at ination measure for monitory policy
framework. Further clarity on ination targeting and its trajectory would guide the interest
rate going forward.
Know the team behind this book

1. Madhu The Incredible Hunk
Hailing from the South, this tness freak has a strict diet regimen, which he augments with
his love for cycling. This healthy lifestyle has assured him a good physique, which has earned
him the fond nickname of Salman Khan among his colleagues. However, he does have one
guilty pleasure that he frequently indulges in, his deep, dark secret dark chocolate. When he
does choose to stray from his strict diet, youll nd him happily gobbling all forms of dark
chocolate from the good ol dark chocolate to ice-creams, and any other kind of dark
chocolate dessert variant. And when he isnt running around getting business in, hes a
typical sons father, kicking back with his son watching superhero movies and no, before
you go there, not just the Rajnikanth ones! Cool as a cucumber at all times, Madhu is a great
asset to the team.
2. Sharmili The Worrywart Mom
A child at heart, this Marathi mulgi still enjoys watching cartoons and TV soaps, and youll
often nd her happily sneaking a peek at work on her laptop when on short breaks. A fanatic
of The Bold and the Beautiful, Sharmili went so far as to attempt drawing out the family tree.
Suce to say that didnt go very well given the characters in the show and their intertwined,
beyond-complicated relationships! Aside from that, she also enjoys her dosage of
F.R.I.E.N.D.S., and her OCD, neat-freak mannerisms have earned her the nickname Monica
among friends and family. When shes not shuing between cabins at work, Sharmili is a
full-time, rst-time mom, chasing her young son around and pampering him silly so all the
shows and cartoons have taken a backrest. Easy-going and carefree, Sharmilis great fun to
be around, and her vivacity is unmistakable.
3. Divya The Straight-Shooter
This Marketing diva is, to put it plainly, full of contradictions. Swining to and fro from
philosophy to reality, Divya often questions the purpose of life; feeling materialism is a curse
and that life isnt worth it if you cant spare time to see the sunshine and smell the roses while
simultaneously feeling youve got to work and slog till it kills you just to earn the big bucks
and own everything materialistic there is to own. If her bank account was overowing with
the moolah, shed probably be a traveller in search of wanderlust, visiting every place on the
map. Then again, she might also be some la-di-dah, Page-3 socialite attending kitty parties,
going for spa treatments, brunch parties, and other such supercial events. Thats not it just
yet she might also just give it all up and become a semi-monk, an ascetic on the journey of
life trying to tap her inner Zen. Yep, contradictions galore, this one its like she puts it, Still
wondering, still discovering. How profound. And while she may strut around work all het up
and ustered, Divyas equally fun and makes for great company.
4. Tina The Tiny One
As tiny as they come, this esty one is forever buried in her books if shes not at her desk at
work, youll nd her sitting comfortable on the reception sofa, engrossed in a book. Creative
to the bone, Tina enjoys reading, writing, and drawing. If you need proof, just ask her to write
a 500-word article and see what she gives you. When she isnt exhausting her ngers at her
computer at work, shes plonked in front of the TV switching channels and watching recorded
shows. Not one for vegetables at all, Tinas a strong proponent of non-vegetarian food and all
things even remotely associated to the word chocolate. And while she may come across as
quiet and shy at rst, this tiny package is a whole other ballgame altogether. An English prude
with a strange pet peeve (she hates people sniing), Tinas fun to be around once you get to
really know her.
5. Pankaj The Sanyasi
Born to ride, Pankaj denes the word wanderlust. Hopping on his bike quite spontaneously,
hes one to travel to quaint, unconventional locations to unwind. A monk in the making (with
no Ferrari to sell, though sadly), Pankaj, weary with the conditioned ways of living, is on the
brink of renunciation. Passionate about Tarot, hes actively involved in penning his own Tarot
predictions on a yearly basis so, you could approach him if youd like to know how your stars
are aligned this year. An avid reader, his literary interests rest mainly in ancient Indian culture
(i.e. the Vedas/Upanishads) and psychology; and given his obsession with Freud, dont be
surprised if you nd him psycho-analysing you or playing mind games in the course of an
innocent conversation. Bitten by the movie bug, his repertoire of movies watched is
expansive and exhaustive. All in all, his bindaas go-with-the-ow attitude is a refreshing
change at the workplace, and his talking T-shirts are pretty cool, too!
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Mutual Funds

A long overdue gathering

Career blues & financial woes

In the spirit of mutual interests

Tea, biscuits, & some risky business

Creativity lingers in those nimble fingers

All that glitters is not Gold

When nothings left, go right

Decoding the warning signs

Fat Lees & timing details, please!

Ashwins groans & Sids goals

The aftermath of Ashwins chips & the thing about SIPs

Are you loansome tonight?

Teary eyes, sad goodbyes, & an unexpected surprise

CEO, Birla Sun Life Asset Management Company

From past to future forward

From past to future forward

A long overdue gathering

A long overdue gathering

A long overdue gathering

A long overdue gathering

Career blues &

Career blues & financial woes

Career blues & financial woes

Career blues & financial woes

In the spirit of mutual interests

In the spirit of mutual interests

In the spirit of mutual interests

Tea, biscuits, & some risky business

Tea, biscuits, & some risky business

Creativity lingers in those nimble fingers

Creativity lingers in those nimble fingers

Creativity lingers in those nimble fingers

Take home more!

Save tax & aim to create wealth.

Birla Sun Life

sms TAX to 56161

Premium SMS charges apply.

Birla Sun Life Tax Relief 96

Note: Risk is represented as:

(BLUE) investors understand that

All that glitters

All that glitters is not Gold

All that glitters is not Gold

When nothings left,

When nothings left, go right

When nothings left, go right

Decoding the warning signs

Decoding the warning signs

Decoding the warning signs

Fat Lees &

Fat Lees & timing details, please!

Fat Lees & timing details, please!

Ashwins groans & Sids goals

Ashwins groans & Sids goals

Ashwins groans & Sids goals

Ashwins groans & Sids goals

The aftermath of Ashwins chips

The aftermath of Ashwins chips & the thing about SIPs

The aftermath of Ashwins chips & the thing about SIPs

The aftermath of Ashwins chips & the thing about SIPs

Take home more!

Save tax & aim to create wealth.